Trade and Institutions: Evidence from Regional Studies
This paper studies the relationship between trade and institutions in regions for the period 1980 to 2010 using the generalized method of moments estimation technique and other instrumental variable estimation technique such as two stage least square and two stage generalized least square in order to ensure validity of our GMM estimates. The study finds that, consistent with past literature, institutions do have a significant effect on trade. Different measures that capture domestic and international institutions were used. It was found that domestic institutions had a more significant effect on trade than international institutions. Domestic institutions were also found to be more inward looking and protectionist in nature and were probably increasing average tariffs in order to protect domestic trade, while international institutions were probably more concerned about regional integration, tariff reduction and trade facilitation in general. Using different measures of economic policy, we find from our results that institutions that affect trade do not differ significantly from one another. The effectiveness of domestic institutions in promoting trade was examined through interacting domestic institutions with access to local and foreign markets (market access), market potential (market size) as well as regional average tariffs, the result was that domestic institutions increase cost of international trade through increasing tariffs but decrease transportation to markets and were not developing regional specific market potential, the results for international institutions were a reduction of all three factors i.e. tariffs, cost of transportation to market and market size.
|Date of creation:||12 Oct 2013|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Araujo, Luis & Mion, Giordano & Ornelas, Emanuel, 2016.
"Institutions and export dynamics,"
Journal of International Economics,
Elsevier, vol. 98(C), pages 2-20.
- Luis Araujo & Giordano Mion & Emanuel Ornelas, 2012. "Institutions and Export Dynamics," CEP Discussion Papers dp1118, Centre for Economic Performance, LSE.
- Luis Araujo & Giordano Mion & Emanuel Ornelas, 2012. "Institutions and export dynamics," Working Paper Research 220, National Bank of Belgium.
- Araujo, Luis & Mion, Giordano & Ornelas, Emanuel, 2012. "Institutions and Export Dynamics," CEPR Discussion Papers 8809, C.E.P.R. Discussion Papers.
- Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, 06.
- Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," NBER Working Papers 9305, National Bureau of Economic Research, Inc.
- Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers.
- Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," CID Working Papers 97, Center for International Development at Harvard University.
- Romain Wacziarg & Karen Horn Welch, 2008. "Trade Liberalization and Growth: New Evidence," World Bank Economic Review, World Bank Group, vol. 22(2), pages 187-231, June.
- Wacziarg, Romain & Welch, Karen Horn, 2003. "Trade Liberalization and Growth: New Evidence," Research Papers 1826, Stanford University, Graduate School of Business.
- Romain Wacziarg & Karen Horn Welch, 2003. "Trade Liberalization and Growth: New Evidence," NBER Working Papers 10152, National Bureau of Economic Research, Inc.
- Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
- Bougheas, Spiros & Demetriades, Panicos O. & Morgenroth, Edgar L. W., 1999. "Infrastructure, transport costs and trade," Journal of International Economics, Elsevier, vol. 47(1), pages 169-189, February.
- Spiros Bougheas & Panicos Demetriades & Edgar Morgenroth, 1996. "Infrastructure, Transport Costs and Trade," Keele Department of Economics Discussion Papers (1995-2001) 96/7, Department of Economics, Keele University.
- Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
- Craig A. Depken, II & Robert J. Sonora, 2005. "Asymmetric Effects of Economic Freedom on International Trade Flows," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 4(2), pages 141-155, August.
- Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:50628. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.